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RRR – Rates, Recession, Rupee

Tale of the Tape 

Hola Amigos. One more day to go for the weekend. 😇

Markets ended volatile Thursday on a negative note. Nifty and Sensex closed down half a per cent each in reaction to the US Federal Reserve policy outcome. More details below. Midcaps (+0.3%) and Smallcaps (+0.6%) continued to outperform. 💪 

Most sectors ended in the red. Banks and NBFCs were the top losers, down 1.4% each. FMCG (+1.3%) stock hit a new all-time high. 💯

The rupee hit a new all-time low of Rs 80.67 against the US dollar. 🤕

This midcap IT stock can give a +50% return from current levels. More details below. 💸

Reliance Industries is in talks to acquire beauty retailer Sephora, according to media reports. 💄

Ambuja Cements dropped over 3% intraday after SEBI added it to the Additional Surveillance Measure (ASM) Stage 1 list. Stocks in the ASM category are monitored by SEBI and subject to trading restrictions. 🔍

Fortis Healthcare tanked 15% after the Supreme Court ordered a forensic audit of its deal with Malaysia’s IHH Healthcare. 🚨

Bharti Airtel gained 1% after 9.4 cr shares changed hands in a block deal. 🤝

Aptus Value Housing rallied +6%. Global brokerage firm Citi sees a 33% upside from current levels. 💰

Cryptos crept higher. Bitcoin rose ~2%. Ethereum was down 3%. Ripple rallied +6%. 🚀

Here are the closing prints:

Nifty 17,629 -0.5%
Sensex 59,119 -0.6%
Bank Nifty 40,630 -1.4%

Fear Not The Rate Hikes?

The US Federal Reserve increased interest rates by 0.75% for the third time in a row! The rate hike was on expected lines but turns out it won’t be enough to control soaring prices. Didn’t y’all say inflation was transitory? 😶

The Fed’s too little too-late approach to controlling US inflation may prove to be a headache as experts forecast more rate hikes of similar size to follow in upcoming months. PS – a further 1.25% increase in interest rates is expected before the end of 2022. This in turn would push the US economy into a recession sometime next year. PS – during a recession, employees lose their jobs, commodity prices fall and business slows down due to weak demand. 📊 

As bad as it sounds, some experts believe this could be a blessing in disguise for India. As we all know, India imports 83% of its total oil requirements. Lower oil prices would strengthen Govt finances, and boost consumer spending and corporate profits, said Sunil Subramaniam, MD & CEO, at Sundaram Mutual. India’s robust economic outlook will in turn attract foreign investors which is a positive for equity markets, Sunil added. India is undeniably in a better position than its advanced peers but it won’t be completely immune to these global shocks. 👀

The US is India’s largest trade partner. Indian exports to the US stood at $76.1 billion in FY22, +47% over the previous year. Several industries like IT, pharma, and chemicals earn the bulk of their revenue from the US. Any slowdown in the US would hurt business back home. Bottomline – identify fundamentally strong domestic first companies. Pro Tip: find all the relevant information about a stock, expert views, and trading calls (for short-term traders) only on 💯

Show Me The Money

KPIT Tech rallied +9% intraday to hit the highest level since Jan 2022. For comparison, India’s 2nd largest IT services company, Infosys hit a 16-month low today. What’s going on here? 🤔

Recently, KPIT Tech announced they will buy Germany-based Technica Engineering for Rs 640 cr. Technica is a leading auto tech company. They offer a wide range of services from product design, prototype and system management. Volkswagen, Audi, BMW and Hyundai are some of its marquee clients. Technica also provides hardware and software solutions for self-driving cars, which is a futuristic and high-growth business.  🚗

The acquisition is a big positive for KPIT Tech as it seeks to strengthen its position in the global automotive system engineering market. The deal would not only add to its existing capabilities but also open up new opportunities like self-driving cars, Advanced Driver-Assistance System (ADAS) and more. 👨‍💻

Bottomline: KPIT Tech’s acquisition of a fast-growing niche business at dirt cheap valuation has got investors singing its praise. At least someone is making the most of the bear market in the IT industry. PS – Goldman Sachs sees +50% upside from current levels. 👍

Stocktwits Spotlight

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